Economic Minister asks EBA opinion on foreign-currency loans

MTI – Econews

Wednesday, August 24, 2011, 06:40

Minister of National Economy Görgy Matolcsy asked for an opinion of the European Banking Authority (EBA) concerning difficulties in the Hungarian financial system resulting from foreign-currency indebtedness of the general public in Hungary.

In a letter sent to EBA, the minister emphasised that the high proportion of foreign-currency debts caused serious problems to households in Hungary following the economic crisis and the appreciation of the Swiss franc.

Matolcsy asked the opinion of EBA on what risks can result for debtors from the fact that most of the household debt in Hungary consists of foreign currency – mostly Swiss franc-denominated – mortgage debt; in what proportion this situation is a result of inadequate EU and local regulations; are there pre-crisis international cases when such a situation occurred and was handled more efficiently than in Hungary; and does the EBA agree with the Hungarian view that the risks of foreign-currency indebtedness should be decreased by macro-prudential and consumer protection regulations in Hungary as well as in the EU as a whole.

The Ministry wants the EBA analyses to help the special working groups elaborating options for protecting peoples' homes and finding out the historic process leading to widespread foreign-currency indebtedness in Hungary.

Related articles

Hungaryʼs government plans to reduce the cash flow-based general government deficit to zero by 2020, while achieving economic growth over the European Union average in 2018-2022, Minister for National Economy Mihály Varga said at the annual opening of the Hungarian Chamber of Commerce and Industry (MKIK) on Tuesday.

National Bank of Hungary (MNB) Governor György Matolcsy called for comprehensive competitiveness-boosting reforms in Hungary, with a further reduction of the personal income tax as a key element, in an interview published in Thursdayʼs issue of weekly Figyelő, summarized by state news agency MTI.

The Monetary Council of the National Bank of Hungary (MNB) reiterated its position to keep the central bankʼs key rate on hold at 0.90%, while remaining prepared to use unconventional policy tools if necessary, condensed minutes of the rate-settersʼ policy meeting in July show, news wire MTI reported Wednesday.

International Monetary Fund (IMF) staff acknowledged Hungaryʼs “high economic growth” over the past several years and said the medium-term outlook for the country “remains favorable but is subject to risks” in a concluding statement issued yesterday, following regular Article IV consultations, according to Hungarian news agency MTI.

The International Monetary Fund (IMF) delegation in Hungary said the country’s mid-term outlook is positive because of the countryʼs stable economic growth and because its risks have been successfully reduced using both conventional and unconventional tools, Hungarian new agency MTI reported the National Bank of Hungary (MNB) as saying.

National Bank of Hungary Governor György Matolcsy will take over responsibility for financial stability at the central bank, modifications to the MNB’s operating rules published in the official gazette Magyar Közlöny on Friday show, according to state wire service MTI.

The U.S. Embassy in Hungary rejects speculation that it may have tried to overthrow the Orbán government, Cultural Attaché Richard Damstra told Népszava, addressing statements made yesterday by György Matolcsy, governor of the National Bank of Hungary (MNB), regarding an unspecified NATO ally that Hungarian media speculated to be the United States.

György Matolcsy, the governor of the National Bank of Hungary (MNB), said he believes an unspecified NATO ally was trying to overthrow the Hungarian government in 2015 through the brokerage scandals at that time, according to widely reported comments by the governor in Parliament Wednesday.

GDP growth in Hungary could reach 3.5-4% in 2017, above even the governmentʼs own forecast, National Bank of Hungary Governor György Matolcsy said today at a meeting of the parliamentary Economic Committee, as reported by Hungarian news agency MTI.

Decision-makers at the National Bank of Hungary (MNB) reiterated the central bankʼs stand on using unconventional tools to achieve monetary policy goals, rather than changing the base rate, in a review of those tools published today.